S&P on Citi - Maintains Buy rating

kang_wang

I just saw the latest S&P's report on Citigroup. I can't share the PDF document here because it's now allowed, but I can copy and paste some of the text here:

12-month target price: $6

Analysis prepared by Erik Oja on January 21, 2011, when the stock traded at $ 4.88.

Highlights
ä Fourth quarter Citicorp revenues fell 12.5% from third quarter levels, with most of the decline coming from the Securities and Banking division. The Regional Consumer Banking division contributed steady results, driven by Asia and Latin America.We expect Citicorp total revenues in 2011 to rise 8.4%, following a 6.2% increase in 2010.
ä In the fourth quarter, Citigroup reduced its loan loss provision by 18% from third quarter levels, to $4.84 billion, from $5.92 billion. The total allowance for credit losses at December 31 stood at $40.65 billion, equal to 209% of nonaccrual  loans of $19.41 billion and 192% of nonaccrual assets of $21.14 billion, a more than adequate level at this late stage in the credit cycle, in our view. Nonaccrual loans fell 13% in the fourth quarter, as $6.854 billion in net chargeoffs outweighed a $3.842 billion increase of new nonperforming loans, lower than in previous quarters.  Taking all of this into account, and our 2011 net chargeoff forecast of $25 billion, we expect loan loss provisions of $13.0 billion in 2011, down from $26.04 billion in 2010.  ä We see EPS of $0.45 in 2011 and $0.54 in 2012.

Investment Rationale/Risk
ä Although Citigroup returned to profitability in 2010, with net income of $10.6 billion, versus a loss of $1.6 billion in 2009, fourth quarter results were marred by sub-par equity and fixed income trading results, weak net interest income growth in North American Regional Consumer Banking, and a $1.1 billion credit valuation adjustment.
However, we think Citigroup has made good progress in improving credit quality,  and we expect further improvement in 2011. We also think Citigroup has made significant
progress in selling off Citi Holdings, a portfolio of legacy businesses, improving C's 2011 earnings visibility.We now feel confident in valuing Citigroup on our earnings per share outlook, rather than tangible book value per share. ä Risks to our recommendation and target price include higher FDIC fees on the largest banks, debit card interchange caps, credit card regulation, loss of credit card market share to debit cards, the costs of U.S. financial regulatory reform, and the foreclosure and mortgage putback issues. ä Our 12-month target price of $6 is based on a slightly higher than peers multiple of 13.3X our 2011 EPS estimate of $0.45.

Also on AMD, ThinkEquity LLC maintains a Buy rating with a price target of $14, quoting "fundamentals are gradually improving".

kang_wang

Correction: I can't share the PDF document here because it's NOT allowed

firecs

Thanks for sharing... Ding! I also think C is a good long term holding.

阿丙

感觉应该等一两个星期再看看.刚开跌,是否能很快稳住还难说.

dividend_growth

根据上个季度的表现，C的经营比WFC, JPM, USB差很多很多。

现在C唯一对投资者有吸引力的就是price-to-book ratio。

vlo

阿三公司不行呀

根据上个季度的表现，C的经营比WFC, JPM, USB差很多很多。

现在C唯一对投资者有吸引力的就是price-to-bo ...
dividend_growth 发表于 2011-2-28 13:54

阿丙

回复 5# dividend_growth

不过也正是因为如此，它的价格才一直比较低，靠近RANGE的底部；而因为在底部附近，它再跌的空间比向上的空间要小得多，还是值得关注的。